Intrinsic value of Clayton Williams Energy - CWEI

Previous Close

$137.42

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$137.42

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CWEI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in ), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
(a)
   1
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -100.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  228
  234
  240
  246
  254
  262
  271
  281
  291
  302
  314
  327
  341
  355
  370
  387
  404
  422
  441
  461
  483
  505
  529
  554
  581
  608
  638
  668
  701
  735
Variable operating expenses, $m
 
  35
  36
  36
  37
  39
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  102
  107
  112
Fixed operating expenses, $m
 
  297
  305
  312
  320
  328
  336
  345
  353
  362
  371
  381
  390
  400
  410
  420
  431
  441
  452
  464
  475
  487
  499
  512
  525
  538
  551
  565
  579
  593
  608
Total operating expenses, $m
  0
  332
  341
  348
  357
  367
  376
  386
  396
  406
  417
  429
  440
  452
  464
  476
  490
  502
  516
  531
  545
  560
  576
  592
  609
  626
  643
  662
  681
  700
  720
Operating income, $m
  0
  -103
  -106
  -109
  -111
  -113
  -114
  -115
  -115
  -115
  -115
  -114
  -113
  -111
  -109
  -106
  -103
  -99
  -94
  -90
  -84
  -78
  -71
  -63
  -55
  -45
  -35
  -24
  -12
  1
  15
EBITDA, $m
  0
  61
  62
  64
  67
  70
  75
  80
  87
  95
  103
  112
  123
  135
  147
  161
  176
  192
  210
  228
  249
  270
  293
  318
  345
  373
  403
  435
  469
  506
  544
Interest expense (income), $m
  0
  52
  53
  55
  57
  59
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  97
  102
  108
  113
  119
  125
  132
  139
  146
  154
  162
  171
  180
  189
  199
Earnings before tax, $m
  0
  -155
  -160
  -164
  -168
  -172
  -175
  -179
  -182
  -185
  -188
  -190
  -193
  -195
  -197
  -198
  -200
  -201
  -202
  -203
  -203
  -203
  -203
  -202
  -201
  -199
  -197
  -195
  -192
  -188
  -184
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  0
  -155
  -160
  -164
  -168
  -172
  -175
  -179
  -182
  -185
  -188
  -190
  -193
  -195
  -197
  -198
  -200
  -201
  -202
  -203
  -203
  -203
  -203
  -202
  -201
  -199
  -197
  -195
  -192
  -188
  -184

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  0
  1,306
  1,336
  1,370
  1,408
  1,451
  1,498
  1,549
  1,604
  1,664
  1,728
  1,796
  1,869
  1,946
  2,029
  2,116
  2,209
  2,307
  2,411
  2,521
  2,637
  2,759
  2,888
  3,024
  3,167
  3,318
  3,476
  3,643
  3,819
  4,004
  4,199
Adjusted assets (=assets-cash), $m
  0
  1,306
  1,336
  1,370
  1,408
  1,451
  1,498
  1,549
  1,604
  1,664
  1,728
  1,796
  1,869
  1,946
  2,029
  2,116
  2,209
  2,307
  2,411
  2,521
  2,637
  2,759
  2,888
  3,024
  3,167
  3,318
  3,476
  3,643
  3,819
  4,004
  4,199
Revenue / Adjusted assets
  0.000
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
  0.175
Average production assets, $m
  0
  1,301
  1,330
  1,365
  1,403
  1,446
  1,492
  1,543
  1,598
  1,657
  1,721
  1,789
  1,862
  1,939
  2,021
  2,108
  2,201
  2,298
  2,402
  2,511
  2,626
  2,748
  2,877
  3,012
  3,154
  3,305
  3,463
  3,629
  3,804
  3,989
  4,182
Working capital, $m
  0
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
Total debt, $m
  0
  763
  786
  813
  842
  875
  911
  951
  994
  1,039
  1,089
  1,141
  1,198
  1,258
  1,321
  1,389
  1,460
  1,536
  1,616
  1,701
  1,791
  1,885
  1,984
  2,089
  2,200
  2,316
  2,439
  2,568
  2,703
  2,846
  2,996
Total liabilities, $m
  0
  1,008
  1,031
  1,058
  1,087
  1,120
  1,156
  1,196
  1,239
  1,284
  1,334
  1,386
  1,443
  1,503
  1,566
  1,634
  1,705
  1,781
  1,861
  1,946
  2,036
  2,130
  2,229
  2,334
  2,445
  2,561
  2,684
  2,813
  2,948
  3,091
  3,241
Total equity, $m
  0
  298
  305
  312
  321
  331
  342
  353
  366
  379
  394
  409
  426
  444
  463
  483
  504
  526
  550
  575
  601
  629
  658
  689
  722
  756
  793
  831
  871
  913
  957
Total liabilities and equity, $m
  0
  1,306
  1,336
  1,370
  1,408
  1,451
  1,498
  1,549
  1,605
  1,663
  1,728
  1,795
  1,869
  1,947
  2,029
  2,117
  2,209
  2,307
  2,411
  2,521
  2,637
  2,759
  2,887
  3,023
  3,167
  3,317
  3,477
  3,644
  3,819
  4,004
  4,198
Debt-to-equity ratio
  0.000
  2.560
  2.580
  2.600
  2.620
  2.650
  2.670
  2.690
  2.720
  2.740
  2.760
  2.790
  2.810
  2.830
  2.860
  2.880
  2.900
  2.920
  2.940
  2.960
  2.980
  3.000
  3.010
  3.030
  3.050
  3.060
  3.080
  3.090
  3.100
  3.120
  3.130
Adjusted equity ratio
  0.000
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  -155
  -160
  -164
  -168
  -172
  -175
  -179
  -182
  -185
  -188
  -190
  -193
  -195
  -197
  -198
  -200
  -201
  -202
  -203
  -203
  -203
  -203
  -202
  -201
  -199
  -197
  -195
  -192
  -188
  -184
Depreciation, amort., depletion, $m
  0
  165
  168
  173
  178
  183
  189
  195
  202
  210
  218
  226
  236
  245
  256
  267
  279
  291
  304
  318
  332
  348
  364
  381
  399
  418
  438
  459
  482
  505
  529
Funds from operations, $m
  0
  9
  9
  9
  10
  11
  14
  17
  20
  25
  30
  36
  43
  51
  59
  68
  79
  90
  102
  115
  129
  145
  161
  179
  198
  219
  241
  265
  290
  316
  345
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  0
  -65
  9
  9
  10
  11
  14
  17
  21
  25
  30
  37
  43
  51
  59
  69
  79
  90
  102
  116
  130
  145
  162
  180
  199
  220
  242
  265
  290
  317
  346
Maintenance CAPEX, $m
  0
  -161
  -165
  -168
  -173
  -178
  -183
  -189
  -195
  -202
  -210
  -218
  -226
  -236
  -245
  -256
  -267
  -279
  -291
  -304
  -318
  -332
  -348
  -364
  -381
  -399
  -418
  -438
  -459
  -482
  -505
New CAPEX, $m
  0
  -26
  -30
  -34
  -38
  -43
  -47
  -51
  -55
  -59
  -64
  -68
  -73
  -77
  -82
  -87
  -92
  -98
  -103
  -109
  -115
  -122
  -128
  -135
  -143
  -150
  -158
  -166
  -175
  -184
  -194
Cash from investing activities, $m
  0
  -187
  -195
  -202
  -211
  -221
  -230
  -240
  -250
  -261
  -274
  -286
  -299
  -313
  -327
  -343
  -359
  -377
  -394
  -413
  -433
  -454
  -476
  -499
  -524
  -549
  -576
  -604
  -634
  -666
  -699
Free cash flow, $m
  0
  -252
  -186
  -194
  -201
  -209
  -216
  -223
  -230
  -236
  -243
  -249
  -256
  -262
  -268
  -274
  -280
  -286
  -292
  -298
  -303
  -309
  -314
  -320
  -325
  -330
  -335
  -340
  -344
  -349
  -353
Issuance/(repayment) of debt, $m
  0
  21
  23
  26
  30
  33
  36
  39
  43
  46
  49
  53
  56
  60
  64
  68
  72
  76
  80
  85
  89
  94
  100
  105
  111
  116
  123
  129
  136
  143
  150
Issuance/(repurchase) of shares, $m
  0
  228
  170
  175
  180
  185
  190
  195
  200
  204
  208
  212
  216
  220
  223
  227
  230
  233
  235
  238
  240
  242
  244
  246
  247
  248
  248
  249
  249
  248
  247
Cash from financing (excl. dividends), $m  
  0
  249
  193
  201
  210
  218
  226
  234
  243
  250
  257
  265
  272
  280
  287
  295
  302
  309
  315
  323
  329
  336
  344
  351
  358
  364
  371
  378
  385
  391
  397
Total cash flow (excl. dividends), $m
  0
  -231
  -163
  -167
  -172
  -176
  -180
  -183
  -187
  -190
  -194
  -197
  -199
  -202
  -204
  -207
  -209
  -210
  -212
  -213
  -214
  -214
  -215
  -215
  -214
  -213
  -212
  -211
  -209
  -206
  -203
Retained Cash Flow (-), $m
  0
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
Prev. year cash balance distribution, $m
 
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  11.20
  11.76
  12.35
  12.97
  13.61
  14.29
  15.01
  15.76
  16.55
  17.37
  18.24
  19.16
  20.11
  21.12
  22.18
  23.28
  24.45
  25.67
  26.95
  28.30
  29.72
  31.20
  32.76
  34.40
  36.12
  37.93
  39.82
  41.81
  43.91
  46.10
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  91.1
  85.0
  79.3
  73.9
  68.9
  64.3
  60.0
  56.0
  52.3
  48.9
  45.8
  43.0
  40.4
  38.0
  35.8
  33.8
  31.9
  30.2
  28.6
  27.2
  25.9
  24.7
  23.6
  22.6
  21.6
  20.8
  20.0
  19.3
  18.6
  18.0

Clayton Williams Energy, Inc., an independent oil and gas company, explores for, and develops and produces oil and natural gas primarily in Texas and New Mexico. The company’s principal properties are located in the Permian Basin of West Texas and Southeastern New Mexico, as well as the Giddings Area in East Central Texas. As of December 31, 2015, it had estimated proved reserves of 46,569 thousand barrels of oil equivalent. The company also owns interests in and operates oil, natural gas, and water service facilities, which consist of approximately 393 miles of pipeline, 2 treating plants, 1 dehydration facility, and various wellhead type treating and/or compression stations located in the states of Texas. Clayton Williams Energy, Inc. was founded in 1991 and is headquartered in Midland, Texas.

FINANCIAL RATIOS  of  Clayton Williams Energy (CWEI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CWEI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CWEI stock intrinsic value calculation we used $224 million for the last fiscal year's total revenue generated by Clayton Williams Energy. The default revenue input number comes from income statement of Clayton Williams Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CWEI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.2%, whose default value for CWEI is calculated based on our internal credit rating of Clayton Williams Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Clayton Williams Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CWEI stock the variable cost ratio is equal to 15.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $290 million in the base year in the intrinsic value calculation for CWEI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7% for Clayton Williams Energy.

Corporate tax rate of 27% is the nominal tax rate for Clayton Williams Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CWEI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CWEI are equal to 569.2%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Clayton Williams Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CWEI is equal to -2.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $300 million for Clayton Williams Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 17.381 million for Clayton Williams Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Clayton Williams Energy at the current share price and the inputted number of shares is $2.4 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
AREX Approach Resou 2.84 prem.  prem.
MTDR Matador Resour 20.55 prem.  prem.
AXAS Abraxas Petrol 1.58 prem.  prem.
PNRG PrimeEnergy 46.30 prem.  prem.
EGN Energen 48.28 prem.  prem.
REI Ring Energy 11.69 prem.  prem.
LPI Laredo Petrole 9.79 prem.  prem.
Stock chart of CWEI Financial statements of CWEI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.